China’s new Catalogue for Encouraged Foreign Investment – effective from February 2026

On 15 December 2025, China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly issued the 2025 Edition of the Catalogue of Industries for Encouraged Foreign Investment (Catalogue). The Catalogue became effective on 1 February 2026 replacing the 2022 Edition. The Catalogue is a policy instrument that guides incentives and preferential treatment for foreign investors, in line with China’s broader economic planning.

The Catalogue also serves as an important reference document for local governments when formulating implementation rules, approving foreign-invested projects and granting preferential treatment at provincial and municipal levels. In practice, inclusion in the Catalogue can significantly impact project feasibility, approval timelines and investment returns.

Purpose and nature of the Catalogue

The Catalogue’s primary objective is to encourage foreign investment in key sectors that China is seeking to develop. It also aims to support the economic transformation towards technology, sustainability, and high-value production. It also seeks to encourage and optimize the geographic distribution of foreign capital into less developed regions, such as the central, western, northeastern regions, and into Hainan.

In comparison to the 2022 Catalogue, the 2025 Catalogue has been updated.

The total number of entries increased to 1,679, combining national and regional catalogues. 205 new entries were added, and 303 existing entries modified to reflect evolving economic priorities. Support has been expanded significantly to encompass modern services, the digital economy, clean tech, advanced manufacturing, and a geographical rebalancing.

In the manufacturing sector, the Catalogue expands on items related to terminal products, key components and strategic raw materials, supporting the global integration of advanced manufacturing supply chains.

The services section encourages the development of modern services by adding entries in the fields of business, technical and scientific services, and service consumption, with the aim of supporting high-value service industries such as R&D, consulting and advanced logistics.

The new Catalogue also expands the regional catalogue for the central and western regions, the northeast, and Hainan.

It also places greater emphasis on sustainability, green development and carbon reduction objectives, aligning foreign investment policy with China’s 2030/2060 goals of achieving carbon peaking by 2030 and carbon neutrality by 2060. Several entries reference low-carbon processes, circular economy models and environmentally friendly technologies.

National and regional sections

The Catalogue comprises of two main sections. The first section lists the nationally encouraged industries and applies across China as a whole, including industries where foreign investment is considered strategically beneficial.

The second part lists regionally encouraged industries and is specific to the central and western provinces, the north-east and Hainan. This section highlights sectors that align with local resource endowments, development goals and regional comparative advantages.

Both sections are categorized into major sectors, including agriculture, manufacturing, services, energy and emerging high-tech fields.

Projects that fall within the regional encouraged catalogue often benefit from stronger local-level incentives, including additional fiscal subsidies, faster administrative approvals and preferential access to industrial parks or pilot zones. In practice, regional entries are an important tool for directing foreign investment towards targeted development areas.

Industry Highlights

The Catalogue covers all major industries, with manufacturing forming the largest section. Examples of sectors where foreign investment is encouraged include:

Manufacturing

• Advanced processing and high-tech manufacturing such as high-end semiconductor equipment and materials, precision tools and robotics for automated production lines, and advanced automotive parts and clean energy components.
• Chemical industry and materials such as high-performance polymers and specialty composites, green chemistry and carbon-friendly materials, and hydrogen fuels and storage materials.
• Pharmaceuticals and medical equipment such as innovative drug development, including biologics, production and testing equipment for advanced diagnostics, medical im-aging, and precision surgical devices.

Compared with the 2022 Catalogue, various entries are more specific, particularly in relation to supply-chain security, localization of key technologies, and the upgrading of industrial equipment.

Services and emerging fields

• R&D and innovation services
• Logistics services
• Environmental consulting
• E-commerce infrastructure
• Digital platforms and data services

New and expanded entries also reflect policy support for data-driven services, cross-border service outsourcing, industrial internet platforms, and integrated solutions combining manufacturing and services.

Agriculture, forestry, animal husbandry, fishery

• Cultivation and processing of woody edible oil, spices, specialty forage plants
• Organic and high-value produce cultivation
• Tea planting and processing technologies
• High-yield forage breeding and improved crop varieties
• Modern aquaculture and ecological fish farming technologies

Mining and resource development

Exploration and responsible development of shale gas, coalbed methane, and other unconventional hydrocarbons
Mining of strategic minerals used in advanced manufacturing and energy storage
High-efficiency beneficiation and eco-restoration technologies

Incentives

The Catalogue broadens support for modern services, digital economy sectors, clean tech, and advanced manufacturing significantly. There are various ways of attracting investment. These include:

Import tariff incentives

• Equipment imported for self-use within the total investment amount shall be exempt from customs duties.

Corporate income tax incentives

• Preferential corporate income tax rate of 15% in designated sectors and regions (e.g., western provinces and the Hainan Free Trade Port).
• Withholding tax credit for foreign investors who make direct investments using distributed profits.

Land incentives

• Preferential land pricing or allocation policies in economic zones.
• Support on reducing initial land acquisition costs such as long-term leases and rent-to-own options.

Regional and sector-specific advantages

• Enhanced support to attract foreign capital into emerging high-tech hubs and renew-able energy projects,
• Possible benefits from faster customs clearance
• Possibility of simplified foreign exchange procedures
• Possibility of easier access to government funding programs.

Enterprises seeking certain tax incentives, such as a reduced corporate income tax rate of 15%, must not generate all their revenue from the encouraged industry sector. Instead, a certain percentage (usually at least 60%) of their total sales revenue must come from encouraged industries. In certain pilot areas, such as free trade zones (FTZs) and the Hainan Free Trade Port, encouraged projects may also enjoy more liberal market access and cross-border capital movement policies.

Interaction between the Catalogue and the new 5-Year Plan

The Catalogue translates China’s 15th Five-Year Plan (2026–2030) into practical guidance for foreign investors. While the Plan establishes national objectives, such as the promotion of high-tech industries, green energy, and regional development, the Catalogue pinpoints the specific sectors and regions in which foreign investment is encouraged, providing incentives and expedited approvals. Key priorities in the Plan include advanced manufacturing, the technological upgrading of traditional industries, and breakthroughs in emerging industries. The Plan also emphasises future-oriented strategic sectors, such as AI, quantum technologies, humanoid robots, brain–computer interfaces, and 6G networks. The Catalogue directs foreign investment towards these priority areas by signalling policy support and eligibility for preferential treatment. By doing so, it aligns international capital with the Plan’s strategic objectives, ensuring that foreign participation contributes directly to China’s modernisation and innovation goals.

Interaction between the Catalogue and the Negative List

All investments are limited by the boundaries set out in China’s Special Administrative Measures (Negative List). The Negative List defines what foreign investors cannot do, or can only do under certain conditions, while the 2025 Encouraged Catalogue indicates the areas in which China actively welcomes and incentivises foreign investment. Together, they form a ‘negative plus positive list’ system that balances market access control with targeted opening and investment promotion.

Benefits for companies from the DACH region

The Catalogue can provide incentives for DACH companies investing in China in sectors such advanced machinery and industrial automation, chemicals and speciality materials, medical equipment, and R&D-driven high-tech activities, but also in many other sectors. This reflects China’s industrial upgrading and innovation priorities under the 15th Five-Year Plan (2026–2030).

In the medical sector, for example, the Catalogue explicitly encourages foreign investment in high-end medical equipment such as advanced imaging systems, diagnostic devices, precision instruments, digital health technologies and smart medical equipment. These are areas in which DACH companies are globally competitive. The encouraged status can facilitate local manufacturing and R&D, supports integration into China’s healthcare modernisation drive and improves access to local incentives and policy support. Beyond financial benefits, inclusion in the Catalogue sends a strong policy signal of regulatory support, enhancing planning certainty and cooperation with local authorities.

The Catalogue offers tangible advantages to DACH investors operating in encouraged sectors, including eligibility for tax incentives and customs duty exemptions on imported self-use equipment, as well as preferential land-use policies. These are particularly relevant for capital-intensive manufacturing, chemical production and medical equipment facilities. Investments located in central and western regions or Hainan may also benefit from reduced corporate income tax rates, which improves the overall economics of projects. The Catalogue also supports the reinvestment of profits in encouraged projects through tax credits, thereby encouraging long-term localisation and expansion.

Overall, the Catalogue can help DACH investors to lower costs, enhance returns and align their investments in China strategically with national goals for instance in advanced manufacturing, healthcare modernisation, technological upgrading and future-oriented industries.

Bottom line

The Catalogue represents a significant update to China’s foreign investment framework, clearly indicating where international capital is most welcome. By significantly expanding and refining the list of encouraged industries, the Catalogue translates China’s strategic development priorities under the 15th Five-Year Plan into concrete, actionable guidance for foreign investors. Inclusion in the Catalogue is not merely indicative. In practice, it can directly impact the feasibility of projects, the speed of approvals, operating costs, and long-term returns.

What does this mean for your company?

• Is your current or future business activity covered by the national or regional encouraged-investment catalogues?
• Can you benefit from tax incentives or customs exemptions?
• Does regional expansion, relocation, or establishing a new entity make strategic sense (e.g., Western China, Hainan, FTZs)?

Given these factors, an early and structured assessment of your project is essential to realistically evaluate incentive opportunities and to incorporate regulatory requirements into decision-making with confidence.

We pave the way:

• Initial Review of the 2025 Encouraged Catalogue
  A concise assessment of your project and the realistically accessible incentives in connection with the new Five‑Year Plan.
• Strategic Structuring and Location Advisory
  Guidance on aligning your China investments with industrial and incentive policies.